ROCKFORD — Mayor Larry Morrissey is taking a lead role in efforts to improve Rockford City Market and establish a year-round indoor companion to the popular summertime ritual.

At stake is $2.5 million worth of state grants that Rockford received in 2010 to improve the City Market, which drew more than 75,000 people downtown this year. That money must be allocated by Jan. 31.

Peter Provenzano, chairman of Rock River Development Partnership, brought plans to the city three years ago for an indoor version of the market, a weekly event between May and October that features food and drink, music, and local produce and handmade goods for sale.

But bureaucracy has gotten in the way of talks among RRDP representatives and city and state officials, Provenzano said in an eight-page letter he sent the mayor Sept. 25.

Read the letter.

Provenzano urged Morrissey to get directly involved and, last week, the mayor did. Morrissey spoke at length Thursday with representatives of RRDP and the state Department of Commerce and Economic Opportunity, which administers the RiverEdge grants that, along with tax credits, would finance the indoor market.

"The mayor has a lot of ground to cover," Provenzano said. "He's spending some time, relative to this project, looking at the veins on the leaves of the trees. We appreciate that he's willing to do that."

Complex deal

But getting to this point has been a struggle. The city replaced its project manager when disagreements over the scope and management of the market upgrades reached an impasse in March.

"Throughout the past few years, the city has made repeated attempts to control the project and has often made decisions without RRDP's input," Provenzano wrote in his letter to Morrissey. "Unfortunately, we now feel that the city is creating more obstacles than working toward solutions."

Negotiations have taken too long, Morrissey acknowledged last week, though he declined to say who in his administration has led those talks.

The mayor said it makes sense for him to help move the project forward because he has detailed experience with historic tax credits. Persuading state officials to embrace the financial model for the market improvements has been a challenge because it "contains multiple threads of complexity."

RiverEdge funds must be captured by a nonprofit entity, such as the RRDP. But state and federal historic tax credits are for for-profit entities. The RRDP would create a for-profit subsidiary to satisfy that requirement. The state's concern "all along has been that a for-profit structure, even with a non-profit member, might not work with the DCEO guidelines for River Edge funding and their bond underwriting obligations," Morrissey said.

"We're asking the state of Illinois to get on board with a financial structure that's a lot more complex than they're used to dealing with," Morrissey said.

The city has asked the state for a one-year extension to spend the RiverEdge funds, which are supposed to be allocated by Jan. 31.

Part of our culture

The indoor market would occupy a 20,000-square-foot cluster of building space between 114 and 118 N. Madison St. The property sprawls west to a rear alley that faces the outdoor market space.

RiverEdge funds would pay for enhancements to the outdoor market, too, including covered vendor stalls and electrical and lighting upgrades.

Provenzano and members of RRDP have sought inspiration in visits to successful indoor markets across the country. The Madison Street property has room enough for a weekly market featuring 30 to 40 vendors. There would likely be space to accommodate a commercial kitchen and special events, too.

"The idea is to have weekly winter markets on the alley side of the building, and anchor retail tenants would operate on the Madison Street side during the week," he said.

Rockford City Market attendance has grown every year since its debut in 2009. This year, it drew 75,463 visitors, a 32 percent increase over 2012.

"People want to come downtown and experience this," Provenzano said. "The market brings us together. It's part of our culture. Why wouldn't you want to nurture that and expand it?"

Ald. Tom MacNamara, who represents downtown Rockford, said he's pleased that Morrissey has taken an active role in the market project.

"The aldermen have known that this project has taken a long time and probably far too long," MacNamara said. "We need to understand how the money will be spent, but we also need to continue to show support for the City Market and build on the enthusiasm and momentum that it's created."